SIMON WATKINS: Why George Osborne shouldn't jump the gun in the great RBS sell-off

George Osborne is apparently champing at the bit to start selling the Government’s stake in Royal Bank of Scotland.

Rumour has it he may even sell off a few billion pounds worth of shares this week. But I hope he is not so eager that he jumps the gun.

I have long been in favour of disposing of the State’s 78 per cent stake in RBS sooner rather than later.

Sell-off: George Osborne is apparently champing at the bit to start selling the Government’s stake in Royal Bank of Scotland

We should not be squeamish about the first share sales being at a nominal loss when compared to the price paid during the bailout.

Later share sales will be possible at a higher price. In any case what matters most here is that we return to something that looks like a normal banking system. The bailout was never intended as a punt on the future value of RBS shares and we should not use hindsight to start judging it by that yardstick.

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Even so selling shares in mid-August is probably not the best way to get a decent price. Half of the City’s top deal makers and investors are away sunning themselves.

Trading volumes are low and thanks to events elsewhere – more of which later – markets may be a bit uneasy. Selling now might be attractive for the signal it sends politically about the Chancellor’s decisiveness.

But unless there is a clear case that it delivers better value than waiting a month or so until the City is back in full swing, then it would surely be best to hold fire. We have waited seven years. We can wait another seven weeks.

Boom to bust? The Chinese economic boom of the last 30 years has been one of the single most significant factors in our own economy, for both good and ill

The crash in China’s stock market is demonstrating once again that governments (even Communist ones) cannot control truly free markets. But while the turmoil in Shanghai is a cause for concern, what may be more significant is the scale of the slowdown taking place in China’s economy.

Official figures show China still growing at quite a clip – seven per cent a year at the last count. But there is a growing body of opinion that this figure may be a wild overestimate. Last week, European car-makers warned of sharply slowing sales in China. Ford even predicted its sales there would fall this year – for the first time since 1990.

The Chinese economic boom of the last 30 years has been one of the single most significant factors in our own economy, for both good and ill. Cheap Chinese goods helped to keep inflation low in the West during our own boom and its expansion has sucked in goods and services from Western companies. The scale and pace of its economic growth in recent years is hard to overestimate and any decline should also not be underestimated.

It is often said in economic matters that when America sneezes the world catches a cold. We may be about to find out that the same can be said of China.